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<br />t-- <br />.,...j <br />0') <br />",~ <br />,::;, <br />:'::1 <br /> <br />To pay the costs of operations of the Company, shareholders <br /> <br />are assessed a per share annual fee which is approved by the <br /> <br />shareholders at the Company's annual shareholders meeting. <br /> <br />Shares are assessed at differential rates according to their <br /> <br />class (Class A, B and C), according to policies and formulas <br /> <br />provided in the Articles and Bylaws. <br /> <br />The CompanyOs records <br /> <br />indicate that assessments have been consistently and continuously <br /> <br />made for the purpose of paying operational expenses and capital <br /> <br />costs, but not for the purpose of generating profit. To enforce <br /> <br />payment of assessments, the Company conducts an annual auction of <br /> <br />delinquent shareholders' shares of stock. Only so many shares as <br /> <br />are necessary to pay the shareholder's assessment are sold. <br /> <br />By virtue of statements in the Articles concerning the <br /> <br />purposes of the Company, the description of the line of the <br /> <br />Company's main canals, and the mechanism for the assessment and <br /> <br />forfeitures of shares for non-payment of assessments, we conclude <br /> <br />that the Company is organized as a special purpose corporation <br /> <br />under section 7-42-101, et ~., C.R.S. (Ditch and Reservoir <br /> <br />Companies Act). <br /> <br />We also conclude that the Company meets the <br /> <br />criteria and fits the definition of a mutual irrigation company, <br /> <br />as set forth in the cases of Jacobucci v. District Court in and <br /> <br />for Jefferson County, 541 P.2d 667 (Colo. 1975) and Nelson v. <br /> <br />Lake Canal Co. of Colorado, 644 P.2d 55 (Colo. API'. 1981). <br /> <br />Finally, we conclude the Company has validly elected to accept <br /> <br />and be governed by the Colorado Non-Profit Corporation Act <br /> <br />(section 7-20-101, et ~., C.R.S.l. <br /> <br />6 <br />